Wind power and CO2 emissions in the Irish market

Abstract

This paper presents an empirical analysis of the displacement of CO2 emissions associated with wind generation in the Irish electricity market between December 2013 and May 2017. We find that the average marginal effect of an additional MWh of wind generation corresponds to a reduction in CO2 emissions of 0.401 tonnes in Ireland (All-Island system) and 0.459 tonnes when accounting also for the emissions offset in Great Britain. We also find that, for each given demand level, the amount of emissions displaced by wind varies with the wind level. In particular, overall the amount of total (domestic plus external) CO2 emissions offset by a MWh of wind generation increases as the wind generation level increases, a result which suggests that as wind generation capacity increases the effectiveness of wind in displacing CO2 may be retained. However, when accounting exclusively for the effects of wind generation on domestic emissions, we observe that the effectiveness of wind in displacing emissions may decrease as the amount of wind generation increases further. As the effects of CO2 as a GHG are independent of the location where it is emitted, our work also highlights that accounting for reductions in emissions due to a reduction of imports from, or an increase in exports to, interconnected markets is crucial in this type of analysis due to the potential for underestimating the effects of wind on emissions savings when only national emissions are accounted for. The Irish government has a target for 40% of total electricity generation to be produced by renewable energy sources by 2020 which, according to institutional reports, may entail an additional 25% to 35% increase in wind generation capacity from the present levels. Accordingly, our findings are particularly relevant for policy making since they do not support one of the arguments against further investment in wind, namely that the corresponding environmental benefits in the form of emissions savings are reduced.